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The UK’s CHP Competitive Landscape Is Set for a Shake-up In 2017, Following The Clarke Energy Deal

On December 5, 2016, US manufacturing conglomerate Kohler announced that it has entered into a £300 million ($370 million) agreement to buy gas engine and CHP supplier Clarke Energy, headquartered in the UK. Kohler plans to use the acquisition within its Power Group division to expand into the renewables and low carbon power generation sectors. This deal will represent the second major acquisition in the UK CHP market in the last 12 months – back in May 2016 Centrica purchased ENER-G, for £145 million ($179 million) to lay the foundations for its new Distributed Energy & Power business.

So as the two of the largest UK CHP specialists are snapped up – the interesting question is what will be the impact on the competitive landscape going forward? In the medium term this could open the door to some of the foreign-based CHP specialists that have been eagerly targeting the UK market – such suppliers include AB Energy, Eurosite Power and 2G Energy. Although in the very short term these suppliers will face headwinds through the weak Pound to Euro exchange rates, in a post-Brexit world.

Another competitive trend we anticipate for 2017 is increasing supplier focus on the market for medium-sized CHPs units (engine sizes of 0.5-2 MWe). This is because over the past three years the strongest growth in new installations has taken place across the hotels, hospitals and universities segments with engine sizes up to 2 MWe. Verdantix predicts that multiple CHP suppliers will adapt their go-to-market strategies to target these industries. This can already be seen through Bosch expanding its CHP offering to include modules ranging from 600kWe – 2MWe in 2016.

For more insights on customer buying trends across 10 different onsite generation technologies see our report Businesses Powering On With Decentralized Energy Vision.